Happy New Year! You’d think the first Breakfast Brief column of 2014 would be filled with optimism and warmth, but if you walked outside or looked at your temperature gauge or mobile app in early days of the New Year, they offered neither of those. Of course, this is for those of us living in the Canadian Prairies or the U.S. Midwest. Grain trade over the holiday season was very, very quiet. While the trade might have been slow, I heard of more than a few situations where guys are hauling grain in very cold temperatures. Nonetheless, I hope you enjoyed the holidays with your family and made it a special one. Mine was filled with a bit of travel and obviously some outdoor hockey! With pleasantries aside, let’s get back into it (or as I like to say on Twitter around five AM, “Let’s suit up and play”).
As mentioned, much of the Canadian Prairies are currently colder than Mars, leading more than a few to realize that the colonization of our planetary neighbour may not be unrealistic. Down across the border, the cold temperatures getting pushed down by us friendly Canadians are being labelled as the “Polar Pig” (you can insert your own funny football/pigskin pun here). Mike Musher, meteorologist with the U.S. Weather Prediction Center says “hard freeze warnings and watches…stretch from Texas to central Florida.” No surprise then wheat futures saw some initial benefit from the colder weather but a bearish W.A.S.D.E. report is expected from the U.S.D.A. on Friday, January 10th, thus limiting any gains. The lower prices prompted some International wheat tenders as Egypt and Algeria both purchased big amounts of grain (535,000 tonnes and 500,000 tonnes respectively). North American wheat continues to be on the low end of bids but the cost of transportation to get the grain to the Middle East/North Africa is why the likes of the Black Sea (Russia, Ukraine, and Romania) and France are winning out.
As I’ve mentioned many times in previous articles, there’s a lot of competition in the export market this year. Nonetheless, Canada exported 1.7 million tonnes of wheat in the month of November, the biggest monthly total since August 1997. Between the international competition and the decent start to the European winter crop, the likes of Bank of America, Commerzbank, Philip Futures, and Rabobank are all neutral-to-bearish for wheat prices in 2014, with the last forecaster of this list stressing wheat’s premium to corn should remain strong in 2014. Only Morgan Stanley was looking to some upside this year due to “normalizing yields” falling globally. Ultimately, just as the cold puts a damper on school buses running and any outdoor activity in general, you might have to get out there & just get stuff done. If that’s the case, just like your grain marketing, prepare proactively (albeit with many layers for the cold), dig in, and just get into it. As always, an easy way to start your new grain marketing goals for 2014 is via the FarmLead.com Grain Marketplace.
Brennan Turner is originally from Foam Lake, SK, where his family started farming the land in the 1920s. After completing his degree in economics from Yale University and then playing some pro hockey, Mr. Turner spent some time working in finance before starting FarmLead.com, a risk-free, transparent online and now mobile grain marketplace (app available for iOS & Android). His weekly column is a summary of his free, daily market note, the FarmLead Breakfast Brief. He can be reached via email (b.turner@farmlead.com) or phone (1-855-332-7653.)
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